you're absolutly right, and we know that this feature is kind of needed, technologicaly.
at this poit you can't do that, you can only play a disc loacly.
we are trying to find some answers to this problem, there something that has to be done, we know.
You can do this with VLC now. Just add VLC to your MD's using the 'Computing' button from the main menu. Then click Computing-vlc on an MD to launch VLC. Now in VLC use File-Open Disc on the MD you want to stream from. Select 'DVD (menus)' or 'DVD' then the 'Stream output' tick box...now click 'Settings' and click 'UDP' and enter an address like '22.214.171.124' and a port no. (select 'Play locally' if you want to see the stream on this MD as well). Next hit 'Enter' to close the dialog and your stream will start. By the way you can just as easily stream a DVD or Audio CD that you have already ripped to your Core...just use File-Open File and navigate to your /home/public/data/movies directory and open the content from there.
Now go to a second MD and click Computing-vlc to launch VLC. Now click File-Open Network Stream and then select 'UDP/RTP (Multicast)' and enter the streams address you entere above - '126.96.36.199' and the port no. Now click 'OK' or hit enter and you should see the stream start to play on your MD's screen. Do this on any number of MD's on your network to watch the stream.
Obviously it will be even better when this can all be achieved withing the Pluto UI without having to use the 'Computing' menu...but it does worth fine nevertheless.